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Below the Quote on Fed Rate Cut by Dr Ravi Singh, SVP- Retail Research, Religare Broking Ltd

"In a widely expected move, the Federal Reserve announced a 25-basis point rate cut yesterday, lowering its target range to 4.25%-4.5%, marking the third consecutive reduction aimed at supporting economic growth amid persistent inflation. While the decision was widely expected, the forward guidance surprised markets, as Fed Chair Jerome Powell indicated expectations for two additional cuts in 2025. Powell emphasized the Fed’s commitment to economic stability but cautioned that inflation may take one to two years to return to the 2% target. This more measured approach, contrasting with earlier expectations of aggressive easing, unsettled markets and triggered significant volatility. The cautious tone, coupled with concerns over inflation's persistence, led to sharp declines in major indices, with the Dow Jones Industrial Average dropping over 1,100 points. Although the rate cut may cause short-term liquidity concerns, its long-term impact is expected to be limited, reflecting the Fed’s careful balancing act in navigating economic uncertainties."

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